Labor Dept. Investigating S.F. Giants Over Pay Practices — Again

Update: Saturday, 10 a.m. The Bay City News reports that the San Francisco Giants released a statement today addressing the new investigation by the U.S. Department of Labor into its unpaid internship program:

"The Department of Labor has made an inquiry into our internship program. It is not entirely clear what prompted the inquiry or exactly what the Department may be concerned about," the statement said.

"The Giants have an established, highly sought-after internship program where students have the opportunity to gain real world experiences while earning school credit towards their degrees. In the past, interns were paid monthly stipends in addition to receiving school credit. Interns now are paid at or above minimum wage on top of receiving school credit," the statement said.

Original post: For the second time this year, the San Francisco Giants are under investigation by the U.S. Department of Labor.

At the end of August, the Giants agreed to pay 74 employees $544,715 in back wages after an investigation found some workers in the Giants' clubhouse and elsewhere in the organization were making far below the federal minimum wage of $7.25. The department said that some clubhouse attendants were getting paid $55 a day for working 12 to 15 hours a shift.

Yesterday Myron Levin and Stuart Silverstein of FairWarning.org reported that now the Labor Department is investigating the Giants' “possible improper use of unpaid interns.” (The department is also investigating the Miami Marlins for potential wage violations.)

Levin and Silverstein noted that "The Giants in June also reached a $500,000 settlement in a private class-action suit on behalf of security guards, who claimed they were owed back pay for overtime and for working through breaks and meals."

According to Forbes, the franchise has a value of $786 million. It has the sixth-highest overall payroll in the league at more than $136 million.

Issues raised in the earlier investigation lead to the Labor Department calling for Major League Baseball to examine similar problems in its other clubs. As Levin and Silverstein wrote:

According to a Sept.12 memo from the baseball commissioner’s office to presidents of the 30 Major League clubs, the Labor Department concluded from the first Giants investigation that questionable pay practices “are endemic to our industry.” ... [T]he league office summoned representatives of all Major League clubs to attend a meeting with labor officials in Orlando, Fla., next month.

The meeting was scheduled after the agency urged the commissioner’s office to take action on what an email described as the “catalog of issues” raised by the Giants case. The issues included improperly exempting certain employees from overtime pay, and paying daily rates that might fall short of the minimum wage depending on the number of hours worked.

Representatives from all 30 MLB organizations are expected to attend the meeting with the Labor Department, and MLB has strongly urged the clubs to move toward compliance.

The story goes on to say:

Another issue was unpaid interns. This “was not part of the completed investigation” of the Giants, an email said, “but…has subsequently been raised.”

According to the Labor Department, an unpaid internship is only legal when designed for educational training, and not for the benefit of the employer or to displace regular employees.

Unpaid internships have been under scrutiny of late, particularly in high-profile industries such as media, entertainment — and professional sports.  In June, two interns who were paid below minimum wage sued media company Conde Nast, which has responded by doing away with their internship program altogether.